Permira and Lovering look at piecing together £500m DFS bid

DFS, the UK's largest sofa retailer, could be sold to UK private equity firm
Permira and veteran retailer John Lovering in a deal valued at more than
£500m.

By Helia Ebrahimi

7:02PM GMT 31 Jan 2010

Goldman Sachs, which is advising Lord Kirkham, the founder and owner of the Doncaster-based retailer, has invited a handful of buy-out houses to make bids for the company, which has benefited from the collapse of its rivals Land of Leather and MFI.

While private equity houses such as Apax have ruled themselves out of the running, Permira will have to contend with competition from Cinven, Advent International and Warburg Pincus, which are also considering making bids.

Any deal would trigger a big windfall for Lord Kirkham, who took the company private six years ago for £507m.

With potential changes to capital gains tax on the horizon, Lord Kirkham, 65, hired Alan Jacobs, the former Schroders and Citigroup banker who originally floated the company, to conduct a strategic review, weighing up a return to the stock market or a third-party investment.

Permira and Mr Lovering, who was installed as chairman of pubs group Mitchells & Butlers last week, are yet to finalise a debt package that would allow them to make a formal offer for the 77-store chain.